Accounting Financial Planning Small Business Tax Policy

Employees vs. Independent Contractors

Andrew Kabatchnick, CPA, discusses the differences between employees and independent contractors.

More and more businesses are facing the issue of not knowing whether to classify their employees as independent contractors.  The Department of Labor and individual states are really cracking down because businesses are not paying into unemployment insurance, and Social Security and Medicare taxes.  It has really become a problem and will end up hurting the business owner.

Misclassifying employees’ status can cause a slew of problems such as an audit by the Department of Labor which could result in back taxes, fines, and penalties. Classifying employees as independent contracts might be beneficial in the short term, but could cost you thousands of dollars in the end.

If you are not sure if you should classify your employees as employees or independent contractors, visit this site. It asks you 20 questions that will help you determine how you should classify those who work for you.

Jeremias Ramos is a CPA working at a nationally recognized full-service accounting, tax, and consulting firm with offices conveniently located throughout the Northeast. Jeremias specializes in tax and business consulting with focus areas in real estate, professional service providers, medical practitioners, and eCommerce businesses.

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